Market Analysis: Troubles in Potash Market Might Last for Years

According to Russian billionaire Andrey Melnichenko, the unfavorable conditions in the potash market might take at least a decade to deal with the excess and oversupply caused by the past “disruptive” actions by the biggest sellers. Potash prices started plummeting in 2013 when Russian-Belarusian trade pact collapsed. At that time, Belarusian Potash Company and Canada’s Canpotex controlled about 80 percent of the market and this fact kept prices at high levels, which led to glut but also encouraged a lot of investment.

Mr Melnichenko, the owner of EuroChem Group AG, is Russia’s eighth-richest man. EuroChem expects to preserve its market position thanks to its potash production, due to start in 2017, which will pay some of the lowest costs in the industry, and also while the company has sought to diversify into other products and more complex services, as Mr Melnichenko explained. He said that “producing only commodity fertilizers and selling it to a trader doesn’t work anymore,” adding that “the market is becoming more sophisticated. Farmers are learning to use data and analyze it. That’s why we should offer something smarter.”

EuroChem is moreover looking into expanding in new markets. The company for example sees rising opportunities in the Chinese market by selling specialty crop nutrients aimed at higher yields and better quality. It is also planning to start construction of a new plant in Kazakhstan by the beginning of 2018 to make specialty fertilizer based on phosphate and potash. The company is moreover undertaking many field experiments in order to make a progress with more advanced products. “To be in this business, you have to understand the client’s needs and you can’t manage this process if you do not have retail and do not have distribution,” Mr Melnichenko concluded.

About the Author

Sarah J Cohen is a lawyer and analyst specialized in EU affairs and international finance. PhosphatePrice.com values the diversity of opinions and believes that the plurality of points of view is an asset that should be preserved.